Review of Richard Florida’s The Great Reset

Richard Florida was well-known (and somewhat notorious) when he taught at Carnegie-Mellon University here in Pittsburgh back at the end of the Nineties.  Our politicians were pushing the building of two new stadiums and Florida noted that it wasn’t going to improve Pittsburgh’s economy.

Well, here we are in 2010 with two shiny new stadiums and the city has been through bankruptcy, our Port Authority that runs the buses has had to cut routes and raise fares…I’d say Florida probably pretty much won that argument.

In his newest book, The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity, Florida uses the cycles of the last two depressions to try to get an idea of where the economy is headed after the Great Recession that began in 2008.  Those other two were the Panic of 1873 and of course, The Great Depression.  In each case, full recovery took ten or more years, and led to new living arrangements (what Florida calls “Spatial Fix”) and new ways of living, working and consuming.

Florida notes, for example, that after 1873 the country saw increased urbanization, and after the Great Depression it saw the growth of the suburbs.  In each case, these changes coincided with industrial changes – from agriculture to factories, from factories to knowledge work, and so on.

Today’s world is resulting in numerous changes thanks to the growth of creative work – a theme that has run through many of Florida’s books.  These changes are leading to thr growth of megaregions, a subject covered in Florida’s book, Who’s Your City: How the Creative Economy is Making Where to Live the Most Important Decision of Your Life.  For example, Pittsburgh is part of Chi-Pitts, a region with $1.6 trillion in economic output and 46 million people.  At 100,000 square miles it’s the second largest region in North America when rated by these numbers.  Despite the much heralded (and overused) phrase “The World is Flat,” Florida notes that the world is actually “spiky” and that creatives move to these regions to be near other creatives, which causes ideas to compound on each other and boosts innovation.

Florida makes recommendations on how to encourage this.  For example, he notes that light rail will allow smaller cities to be connected to the hubs of megaregions, and that these lines will encourage infill along the routes.  He says that retraining people who are downsized and providing a social net is key to encouraging prosperity.

One of his more controversial recommendations is to note that home ownership as a piece of the American dream is a thing of the past.  Wealth was tied up in houses in the recent bubble, he argues, instead of being put to use funding businesses and basic research.  Also, as job security becomes a thing of the past and people move constantly on to new opportunities, the more mobile workforce will find that a home can tie them down and keep them from going to where the jobs are.  Florida makes several recommendations about how to provide rental options for these workers.

Two areas I was glad to see him cover were service jobs, which are low paying drudgery for many – Florida notes that innovation by these people should be encouraged along with higher wages, and also the infilling of suburbs, which aren’t going away despite the move of people back into the cities.  He notes initiatives to try to turn these areas into so-called walkable communities.  That’s a subject I’d like to touch on in a later post, along with a number of other themes above.

This really only scratches the surface of the content of the book.  It’s a quick read – twenty-three short chapters, and whether you agree with Florida or not, it will give you much to think about…